Jumbo life insurance policies require skill and experience in order to find insurance companies with the lowest rates and the best underwriting. There are big differences underwriting a policy for $500,000 and one for $15,000,000, or $50,000,000. A key factor in the price is the final underwriting class that is offered. The difference in underwriting classes can be double digit percentages. Don’t be fooled by “loss leader” rates that initially look good during the quoting process. They are typically offered only to people with no medical history, no family history and take no medications for any purpose. Underwriting term insurance can be very different than underwriting permanent insurance such as whole life, indexed universal life and guaranteed universal life. Most high net worth consumers prefer permanent life insurance because the net cost is much lower than term insurance.
The underwriting class is critically important when considering:
- jumbo term insurance
- jumbo whole life policy or
- permanent life insurance.
In fact, getting the best underwriting class should be the agent’s top priority. To get it, your agent must be experienced and willing to present the underwriters with the best case possible. Doing this properly requires a life insurance professional willing to push back and do research about illnesses and medications. The right agent will have extensive relationships with underwriters and is typically is independent, able to represent any company.
A small group of insurance companies specialize in the large case life insurance market. Insurance companies may share underwriting results with one another, which is authorized through the application process. One way is through the MIB (the medical information bureau). The chance of future problems increases if the underwriting process is not being managed properly.
What you need to know to get the best rates:
Check the underwriting history. I work with my clients to get an accurate picture. With it, we create a report of how much coverage is currently inforce and how much will be replaced, if any. The total amount of inforce coverage at the end of underwriting is critical information to share with underwriters, at the beginning of the process.
Chronicle the medical history. This helps us understand both current and past health issues which may impact underwriting. We recently helped a 66 year old woman acquire a jumbo policy for succession planning purposes. She had been on lithium for 15+ years without any problems. Suddenly, she had developed a tolerance to the lithium that created some temporary issues. All her current coverage was issued on a preferred basis. Knowing the history helped the right underwriters understand it was a medication problem and nothing else. Many underwriters declined the case.
Product Design. Underwriting criteria is different for permanent and term insurance and selecting the right product can be complicated. For example, commissions, high cash value riders and term blends should be considered as each of these variables can impact price.
Does premium financing make sense for jumbo life insurance policies? In many cases, it does. Premium financing can be ideal for permanent life insurance when interest rates are significantly lower than the policy’s rate of return or the policyholder’s ROI. An in depth analysis must be done by the life insurance professional that outlines the advantages, the upside and the downside. Premium Financing:
A cover letter for the underwriters helps them understand the goals and objectives for why the life insurance is necessary and affordable. Often, these jumbo life insurance purchases involve premium financing where the cover letter will be equally beneficial.
Please contact me at 561-869-4500 or email me. I offer a complimentary consultation to discuss anything you wish about life insurance or annuities. I am proud of the things many clients have chosen to say about us and perhaps they will give you additional insight about how we do business.
You can visit us at www.facebook.com/lifecycleplanners
Also published on Medium.